EY Global Capital Confidence Barometer shows decline in M&A appetite despite optimism
- Canadian executives optimistic that domestic and global economies are improving
- Majority (81%) of executives do not expect an economic slowdown
- Technology, talent and purpose influence growth and dealmaking strategy
Canadian executives are taking a cautious approach to dealmaking in the year ahead despite overwhelming economic optimism, according to the 21st bi-annual EY Global Capital Confidence Barometer.
All Canadian executives surveyed expect the domestic economy to improve over the next 12 months and 99% believe the same for the global economy. Similarly, 81% do not expect an economic slowdown within the next year despite speculation of a recession in the media.
Confidence is also strong at the micro level with 88% anticipating revenue growth and 91% expecting net profit growth in 2020. This outlook also contributed to Canada rejoining the top five investment destinations among global executives.
“Canadian executives are optimistic but considering growth opportunities carefully,” says Doug Jenkinson, Partner in EY Canada’s Strategy and Transactions practice. “Geopolitical uncertainty and potential impacts — including trade disputes, climate change-related policies and regulatory uncertainty — are subduing deal intentions in the short-term.”
For the first time in the survey’s history, dealmaking appetite has dropped below 45% with just 35% of Canadian executives planning to pursue M&A in the year ahead. This is being largely influenced by the mining and metals sector.
Those with M&A on the horizon are focused on future-proofing their business by acquiring technology and talent. Social purpose is also gaining greater awareness among executives.
Jenkinson adds: “Embracing and demonstrating a stronger corporate purpose is becoming an increasingly important factor in dealmaking strategy. Ninety-percent of Canadian executives say they have social benefit measurement reporting in place or plan to within the next 12 months.”
To read the full report and for more information, click here.
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